Friday, March 19, 2010

Voting cash outBy Subhashree Kishore

The 1000 rupee note has enjoyed more media time than starlets or ‘dynamic’ legislators. For the ordinary citizen who is used to seeing it upclose and personal on notice boards to help him identify the genuine ones, it must have been a good treat. The numerals do not matter. It was obviously far above the statutory favourites of 20000 or 50000.

The Income Tax Act provides for disallowance of cash payments in excess of Rs.20000 for any business expenditure on a single day and this provision also aggregates all cash payments during the day. If an account holder makes a single deposit of above 50000 rupees or aggregates of deposits during the day exceed 50000 rupees he is required to furnish PAN number or details under Form 60. All of this point to cheques, crossed cheques or demand drafts or routing money through banks with adequate safeguards. The ordinary man, even the business man has little option to hoard cash. Of course people find ways to override these through bank safe deposit lockers, benami transactions, a host of accounting wizardry and so forth. But the intent of statute is quite clear. Budget 2010 has proposed to tax non-cash gifts as also cash-gifts in excess of (value of) Rs.50000.

Democracy is all about winning elections and reaping electoral gains. Private donations to political parties have been given legal sanction and 100% deduction is allowed to individuals and companies where donation is made directly to the party. Apparently politics is above religion and vote bank politics like health, sports and public service have to be kept in place. So a generous deduction of 100% has been given, something even gods and charitable trusts or Prime Minister‘s Drought Relief Fund cannot boast about. Of course political parties can be hardly expected to pay taxes. Voluntary donations are tax free.

The Indian National emblem of four lions is also present on the 1000 rupee note. The National Flag, anthem and emblem deserve better respect. It cannot be an article of adornment. The National Flag is seen draped around coffins of officers slain in duty. In a recent case children who refused to sing national anthem were punished.

Cash is as liquid as is elusive and untraceable. It would be a good idea to insist on cheque payments or payment through gift cheques issued by banks where the amount exceeds Rs.50000. A garland of cheques could be as picturesque as a garland of notes. This rule could extend to marriages and other functions as well. It would be true democracy where ruler and ruled would have less resources to punch holes in national emblems or string them or taunt the IT department.